This is courtesy of my partner, John H. Carstens, who is also our firm's managing partner:
In 2003, the Supreme Court of Virginia held that the employer did not timely protect its subrogation rights in a third party action, where its petition was filed after a settlement was reached but prior to the entry of the final order. See Yellow Freight Systems v. Courtaulds Performance Films, Inc, 266 Va. 57, 580 S.E.2d 812 (2003). While the Supreme Court acknowledged that the petition had been filed prior to verdict as required by the statute, as it then existed, the Court found that the subrogation rights had been extinguished by virtue of the settlement. As a result, the employer had no enforceable right at the time it filed its petition and the trial court could not consider it.
Effective July 1, 2004, the Virginia legislature amended the subrogation provisions of the Virginia Workers’ Compensation Act to address the anomaly created by the Courtaulds decision. The statute now provides that the employer shall have a lien against any verdict or settlement. Va. Code § 65.2-309(A). See also, Va. Code §§ 65.2-309.1, 310 and 311. The statute expressly gives the employer, whose lien has not been satisfied, a right to recover against the person receiving the proceeds of the settlement or verdict either through a civil action, or as a credit against future compensation. Va. Code § 65.2-309(D). These rights are extended to the workers’ compensation carrier by Va. Code § 65.2-812.
Plesae contact John Carstens at our Virginia office for further information.